Definition for Bond

Banking Bondbond

A bond is a debt security issued for a period of more than one year with the purpose of raising capital by borrowing. The bonds are sell by Federal government, cities, corporations, states and many other types of institutions.

Bond is work like a loan: the issuer is the debtor, the holder is the lender, and the coupon is the interest. Stocks and Bonds are both securities, however the main distinction between both is that stockholders have an equity share within the firm (they’re owners), whereas bondholders have a creditor stake in the company (they are lenders).

Credit quality and duration are the two features of a bond – and decid the principal of the bond’s rate of interest. Several bonds aged within 90 days but many bonds require 3 decades, Their maturities range between a ninety day Treasury bill to a thirty years govt bond. Corporate and municipals bonds mature within the three to ten-year range.

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